Colombian oil industry warns of an uncertain future

In an interview with Caracol Radio on Friday, Francisco Lloreda, President of the Colombian Petroleum Association, admitted that the future prospects of the Colombian and global oil industries are very uncertain, given the extreme collapse in global oil prices. He stressed that all of the world’s oil companies, including Colombian state-owned oil company Ecopetrol, are doing all they can to adapt to the new reality.

Lloreda added that all of the oil sector workers must also understand this new economic reality and accept that their salaries and compensation will be affected. Lastly, Lloreda warned that the current share price of Ecopetrol and other companies in the sector do not accurately represent their true value, and are largely driven by speculation.

The Colombia oil sector’s workers’ union (the USO) protested outside of Ecopetrol’s offices on Thursday. The USO was calling on the company to lower its costs without firing any workers. However, Ecopetrol’s leadership insists that the company has done everything it can to reduce costs without touching its workforce, including lowering managers’ salaries, and cutting back on helicopter and plane use.

The USO is not worried though that the Colombian government will sell its 80% stake in Ecopetrol, as Ecopetrol’s share price is so low that a sale would be unwise. These fears are not entirely unjustified, though, as the Colombian government just finalized its sale of the state power company Isagen to Canada’s Brookfield Asset Management for $1.99 billion, the minimum price set for the sale, but still the largest privatization in Colombia in the last 10 years.

According to the report, the government will invest the funds in new highways, bridges, and tunnels around the country. Nonetheless, the sale was not without controversy, and Isagen employees staged protests around the country to denounce the privatization. Some analysts also criticized the sale, because the increase in the minimum bid caused the only other bidder to pull out of the auction, ensuring Brookfield would not go over the minimum bid.